Human-factor resource industries are herein defined to be those industries in which a human factor of production participates in individual transactions with users in a one-to-one relationship, where each individual transaction exceeds a sufficient de minimus schedule interval, such as approximately 10 minutes or those industries in which the human factors of production directly interactive with the end user (whether in a one-to-one or a one-to-many relationship) comprise a significant percentage of total costs, such as approximately 15% or greater.
Also, as the value of the human-factor resources increases, the applicable de minimus schedule interval or percentage of total cost percentage declines. A comparative example demonstrating this relationship is that of a medical surgeon, where, regardless of schedule interval or percentage of total costs, the person is a human-factor resource to an office receptionist, where even a long one-to-one schedule interval or a high percentage of total cost precludes the person from being a human-factor resource.
Examples of one-to-one relationships in human-factor resource industries include, a physician engaging in a transaction with one patient at a time; a cosmetologist serving one customer at a time; an employee or independent contractor serving one employer at a time.
Conventionally, business promotion on the basis of price are relatively rare. Examples of such promotion activities include: a recent medical procedure promotion advertised LASIK eye surgery at a transaction price of $2,995 for both eyes at a particular outpatient surgery center; a haircut has been advertised at a transaction price of $10 through a particular branded cosmetology resource network; and, an individual seeking to offer his or her services to a potential employer might advertise a transaction price of $11 per hour.
Furthermore, these prices, once promoted were constant. When a transaction price is advertised, it is generally for any and all potential users at any and all resource network locations, for any available composite resource in the resource network and for any and all times in which the composite resource is made available for transactions. Price-promotion methods in the existing human-factor resource industries are often too inflexible and result in very costly promotion programs if a resource network desired to limit an offer to fewer users, locations, composite resources, or transaction times.
The words “yield management” have a variety of meanings in the present field of invention. For the purpose of this application, the definition of the term, is taken from the perishable resource industry (where the terms “yield management and “revenue management” are often used interchangeably) to mean “a multiperiod pricing strategy in which each price is a function of forecasted excess capacity” (See Ramarao Desiraju & Steven M Shugan, Strategic Service Pricing and Yield Management, 63 Journal of Marketing 1, pp. 44-56 (1999), incorporated herein by reference).
Yield management systems have a long successful history in the perishable resource industries, such as the airline, hotel and car rental industries. In these industries, yield management systems have contributed to substantial increases in profitability, even at relatively small increases in revenue.
In the perishable resource industries, several different types of yield management systems have emerged. These systems are generally classified by Sheryl Kimes in “Yield Management: A Tool for Capacity-Constrained Service Firms.” Journal of Operations Management 8, no. 4 (1989): p. 348-363, the disclosure of which is incorporated herein by reference. Kimes highlights several classes of solution techniques, which she generally categorizes as: (1) mathematical programming, (2) economics-based, (3) threshold curve and (4) expert systems. Although each method of implementing yield management may require an entirely different calculation system, all methods of implementing yield management techniques in a computer-based system attempt to better match the supply of a resource to the demand for a resource.
In addition to classifying yield management techniques currently in use, Kimes describes the necessary conditions under which yield management techniques can be appropriately applied. Kimes lists the following six characteristics: (1) when a firm is operating at a relatively fixed capacity, (2) when demand can be segmented into clearly-identified partitions, (3) when inventory is perishable, (4) when product is sold well in advance, (5) when demand fluctuates substantially, and (6) when marginal sales costs and production costs are low, but capacity change costs are high.
These characteristics well describe the area of perishable resource industry yield management.
There is a desire to apply yield management to the human-factor resource industries. However, four of the above-described six necessary conditions under which yield management techniques can be appropriately applied do not generally apply to the human-factor resource industries.
First, in the human-factor resource industries, capacity is not relatively fixed (per definition element 1), but is highly variable. Resource networks and human-factor resources make decisions on a regular basis which change the available supply of composite resources. Hiring additional human-factor resources, changing the availability parameters of existing resources and human-factor resource decision to change their own availability parameters, sometimes at the last second, in response to demand demonstrate contributory factors to a highly elastic supply. Rather than static and unchanging, the capacity of a particular human-factor resource industry is likely to be highly variable, incorporating such interdependent factors as the time of day, the day of week, the nature of the composite resource and its price curve relative to other similar composite resource, the grouping of reserved demand against the declared capacity and the economic and social trade-offs made by every human-factor resource.
Second, the word perishability (per definition element 3) has a weak meaning in human-factor resource industries. The term perishability only applies in a very limited commercial sense; the human-factor resource has alternative uses for his or her commercial asset. Their asset, time, becomes unavailable for commercial use after a certain date, time or similar temporal event, but may be put to other uses in lieu of its commercial use or may be put to a differing commercial or non-commercial use. For example, a human-factor resource proficient in both women's hairstyling and manicures may perform a haircut, give a manicure, perform other commercial services, other facility-management or administrative tasks, engage in continuing professional education or may devote his or her time to non-professional use.
Third, product is not always sold well in advance (per definition element 4) in human-factor resource industries. Most frequently, the entire transaction (offer, acceptance and consumption) takes place on-premise with only, in some instances, a transaction reservation preceding the transaction and taking place off-premise.
Finally, capacity change costs (per definition element 6) are generally low in human-factor resource industries (as noted above). Furthermore, traditionally, marginal sales costs are extremely high in human-factor resource industries, requiring a general audience marketing program.
There are several industries for which the distinction between whether the industry is characterized by perishable resources or human-factor resources is blurred. Notable among these industries is the healthcare industry and the restauran industry. Such industries lend themselves to comparison with perishable resource industries because the machine and physical plant component of a transaction is similar to that of other perishable resource industries. For example, a hospital stay is similar to a hotel stay and a restaurant seat is similar to an airplane seat. At the same time, they lend themselves to comparison with human-factor resource industries because the human component of a transaction is of a one-to-one nature with an interface duration of greater than a de minimus duration or the human-factor cost relative to the total product or service cost is significant.
To eliminate ambiguity around the distinction between perishable resource industries and human-factor industries, the following delineating characteristics will suffice: perishable resource industries are industries in which an employed human factor of production, if present, participates in multiple individual transactions simultaneously (i.e., a one-to-many transaction relationship), while an employed human factor of production in human-factor industries participates in individual transactions sequentially (i.e., a one-to-one transaction relationship), where each individual transaction exceeds a sufficient de minimus schedule interval, such as approximately 10 minutes or while those employed human factors of production directly interactive with the end user (whether in a one-to-one or a one-to-many relationship) comprise a significant percentage of total costs, such as approximately 15% or greater. Also, as the value of the human-factor resources increases, the applicable de minimus schedule interval or percentage of total cost percentage declines.
The following example transactions fall within the human-factor resource industries:
Unlicensed and licensed personal and professional services such as those rendered by accountants, lawyers, legal assistants, consultants, financial service providers, realtors, insurance agents, travel agents, automotive repair technicians, building contractors, interior decorators, tailors, landscapers, architects, personal trainers, personal counselors, career counselors, health counselors, cleaning services, hair stylists, massage therapists, dieticians, salon/spa professionals, personal escort services, personal security services, lawn care specialists, daycare providers, and psychical service providers;
Medical services such as those rendered by primary care and specialty physicians, nursing staff operating in one-to-one work environments, medical care specialists, dentists, dental assistants, optometrists, opthamologists, cosmetic surgeons, physical therapists, occupational therapists, psychologists, psychiatrists, pharmacists, social workers, allergists, and alternative medical service providers;
Prepared food services such as those provided by quick service, casual dining, fine dining, take-out and delivery service providers;
Educational services provided in a one-to-one transaction environment such as those rendered by sports instructors, vocal instructors, musical instrument instructors, religious instructors and professional skill trainers;
Regulatory and governmental services such as those rendered by compliance inspectors, social service workers, sheriff's officers, police officers, firefighters and emergency response personnel; and
Services provided by employees and independent contractors.
While various example transactions falling within the human-factor resource industries are particularly listed above, it will be understood by those skilled in the art that various additional transactions will also satisfy the criteria for inclusion within the human-factor industries.
The following example transactions fall outside the human-factor resource industries:
Perishable resource industry services such as those rendered by airlines, hotels, rental car companies, golf courses, bowling alleys and arena or stadium sporting/entertainment event-providers;
Mass-produced durable and consumer goods transactions such as automotive, computer, electronic, clothing and grocery transactions.